Table 9. Sensitivity analysis: welfare gains and change in portfolio management method with a delegation option.

Panel A presents welfare gains or losses from having a delegation option versus the no-delegation (baseline) case for alternative specifications of minimum fixed delegation fees. Welfare gain is the percentage increase in the household’s certainty-equivalent consumption stream compared to the no-delegation case. Panel B describes the proportion of investors electing each portfolio management method under different specifications of fees. Delegation, Inertia, and Active mgmt refer to the proportions of investors across all ages choosing delegation, inertia, and active management, respectively. Column 1 shows baseline results with a minimum fee of $2,115 (commensurate with a minimum balance of $150,000). Column 2 provides results when there is no minimum fee for delegation. Column 3 reports results from imposing a minimum fee commensurate with a higher required minimum balance ($243,360), consistent with the industry average. Panel C presents the welfare gain/loss of having access to a Target Date Fund (TDF) but not the delegation option. Column 1 reports the welfare gain with a target date fund fee equal to the current industry level (0.084%). Columns 2 and 3 provide results using a zero and 0.5% TDF fee, respectively. Panel D describes the proportion of investors electing each portfolio management method including target date funds. TDF refers to the proportion of investors choosing target date funds.

Panel A: Welfare gain from a delegation option (%)
	(1) Baseline	(2) No minimum fee	(3) Current industry fees
Welfare gain	1.066	1.2973	0.9044
Panel B: Fraction by portfolio management method with delegation (%)
	(1) Baseline	(2) No minimum fee	(3) Current industry fees
Delegation	27.97	36.20	13.59
Inertia	58.45	54.70	60.04
Active	13.59	9.10	26.37
Panel C: Welfare gain from a target date fund instead of a delegation option (%)
	(1) Baseline	(2) TDF fee = 0.5%	(3) TDF fee = 0%
Welfare gain	0.382	0.5655	1.0102
Panel D: Life cycle fraction by portfolio management method with target date fund (%)
	(1) Baseline	(2) TDF fee = 0.5%	(3) TDF fee = 0%
TDF	21.38	23.18	42.23
Inertia	45.27	44.00	21.04
Active	33.35	32.81	36.73